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CARBON DISCLOSURE PROJECT
CDP Water Disclosure South Africa
Report 2011
Assessing the value of water
On behalf of 354 investors with assets of US$43 trillion
Lead Partner Report Prepared by Carbon Disclosure Project
National Business Initiative WSP Environment & Energy info@cdproject.net
+44 (0) 20 7970 5660
www.cdproject.netCDP Water Disclosure Project 2011
2011 Water Disclosure Capital Innovations, LLC
CARE Super Pty Ltd
Investor Signatories Catherine Donnelly Foundation
Catholic Super
354 CDP Water Disclosure1 Cbus Superannuation Fund
Central Finance Board of the Methodist Church
signatories with assets of US$ 43 Ceres
trillion. Christian Super
Christopher Reynolds Foundation
Aberdeen Asset Managers Clean Yield Group, Inc.
ABRAPP - Associação Brasileira das Entidades Fechadas de Cleantech Invest AG
Previdência Complementar ClearBridge Advisors
Active Earth Investment Management CM-CIC Asset Management
Acuity Investment Management Colonial First State Global Asset Management
Addenda Capital Inc. Comite syndical national de retraite Bâtirente
Advanced Investment Partners CommInsure
Advantage Asset Managers (Pty) Ltd Compton Foundation, Inc.
" Zrt.
AEGON Magyarország Befektetési Alapkezelo Concordia Versicherungsgruppe
Alberta Investment Management Corporation (AIMCo) Connecticut Retirement Plans and Trust Funds
Alberta Teachers Retirement Fund The Co-operative Asset Management
Alcyone Finance Co-operative Financial Services (CFS)
Allianz Global Investors Kapitalanlagegesellschaft mbH Corston-Smith Asset Management Sdn. Bhd.
Allianz Group Credit Agricole
AmpegaGerling Investment GmbH Gruppo Credito Valtellinese
Amundi AM Daegu Bank
APG Group Daiwa Securities Group Inc.
Aprionis de Pury Pictet Turrettini & Cie S.A.
Aquila Capital DekaBank Deutsche Girozentrale
ARIA (Australian Reward Investment Alliance) Deutsche Asset Management Investmentgesellschaft mbH
Arisaig Partners Asia Pte Ltd Deutsche Bank AG
ASB Community Trust Development Bank of Japan Inc.
ASM Administradora de Recursos S.A. Dexia Asset Management
ASN Bank Domini Social Investments LLC
Assicurazioni Generali Spa Dongbu Insurance
Australian Central Credit Union incorporating Savings & Loans Earth Capital Partners LLP
Credit Union
Ecclesiastical Investment Management
Australian Ethical Investment Limited
Ecofi Investissements - Groupe Credit Cooperatif
AustralianSuper
Elan Capital Partners
Aviva
Element Investment Managers
Aviva Investors
Environment Agency Active Pension fund
AXA Group
Epworth Investment Management
Baillie Gifford & Co.
Essex Investment Management Company, LLC
Banco do Brasil S/A
ESSSuper
Banco Santander
Ethos Foundation
Banesprev – Fundo Banespa de Seguridade Social
Eureko B.V.
Banesto (Banco Español de Crédito S.A.)
Eurizon Capital SGR
Bank of America Merrill Lynch
Evli Bank Plc
Bank Sarasin & Cie AG
F&C Management Ltd
Bank Vontobel
FAELCE – Fundação Coelce de Seguridade Social
Bankhaus Schelhammer & Schattera Kapitalanlagegesellschaft
m.b.H. Fédéris Gestion d’Actifs
BankInvest FIDURA Capital Consult GmbH
Banque Degroof FIM Asset Management Ltd
Barclays First Affirmative Financial Network, LLC
Basellandschaftliche Kantonalbank Firstrand Limited
Bayern LB Five Oceans Asset Management Pty Limited
BayernInvest Kapitalanlagegesellschaft mbH Florida State Board of Administration (SBA)
BBC Pension Trust Ltd Folksam
BBVA Fondaction CSN
Blumenthal Foundation Fondiaria-SAI
BNP Paribas Investment Partners Fonds de Réserve pour les Retraites – FRR
Boston Common Asset Management, LLC FRANKFURT-TRUST Investment-Gesellschaft mbH
BP Investment Management Limited Fukoku Capital Management Inc
British Columbia Investment Management Corporation (bcIMC) FUNCEF - Fundação dos Economiários Federais
BT Investment Management Fundação AMPLA de Seguridade Social – Brasiletros
Cover photo: CAAT Pension Plan Fundação Atlântico de Seguridade Social
Cadiz Holdings Limited Fundação Forluminas de Seguridade Social – FORLUZ
The world-class Emalahleni water reclamation plant, a joint
development between Anglo American Thermal Coal and BHP Caisse de dépôt et placement du Québec Fundação Vale do Rio Doce de Seguridade Social – VALIA
Billiton near Witbank in South Africa’s Mpumalanga province, Caisse des Dépôts Gartmore Investment Management Ltd
illustrates the level of ambition and innovation South African Generali Deutschland Holding AG
companies must exhibit to solve water related problems. The Caixa Econômica Federal
California Public Employees’ Retirement System Gjensidige Forsikring ASA
facility purifies 25 megaliters of water every day. 18 megalitres
are supplied to the Emalahleni local municipality, which for years California State Teachers’ Retirement System GLS Gemeinschaftsbank eG
has struggled to meet the water demands of the fast-growing California State Treasurer GOOD GROWTH INSTITUT für globale Vermögensentwicklung
Witbank area. All the water needs of Anglo American's Thermal mbH
Coal Greenside, Landau and Kleinkopje collieries, as well as Calvert Asset Management Company, Inc
Governance for Owners
its shared services departments, are met by the plant. The Canada Pension Plan Investment Board
Government Employees Pension Fund (“GEPF”), Republic of
Emalahlneni water reclamation plant illustrates the magnitude of Canadian Labour Congress Staff Pension Fund South Africa
the investment required, technical best practice and the necessity
Green Century Capital Management
to work in partnership to contribute to a clean and stable water
supply in South Africa. Groupe Investissement Responsable Inc.
1 2011 information request dated February 1st, 2011.CDP Signatories
GROUPE OFI AM NH-CA Asset Management StoreBrand ASA
Grupo Banco Popular Nikko Asset Management Co., Ltd. Strathclyde Pension Fund
Hang Seng Bank Nissay Asset Management Corporation Superfund Asset Management GmbH
Harrington Investments, Inc NORD/LB Kapitalanlagegesellschaft AG SUSI Partners AG
Hauck & Aufhäuser Asset Management GmbH Nordea Investment Management Sustainable Capital
Hazel Capital LLP Norfolk Pension Fund Svenska kyrkan, Church of Sweden
HDFC Bank Ltd Norges Bank Investment Management (NBIM) Syntrus Achmea Asset Management
Health Super Fund North Carolina Retirement System T. SINAİ KALKINMA BANKASI A.Ş.
Henderson Global Investors Northern Ireland Local Government Officers’ Superannuation TD Asset Management Inc. and TDAM USA Inc.
Committee (NILGOSC)
Hermes Fund Managers Telluride Association
NEI Investments
HESTA Super Terra Forvaltning AS
Oddo & Cie
Healthcare of Ontario Pension Plan (HOOPP) The Brainerd Foundation
OECO Capital Lebensversicherung AG
HSBC Holdings plc The Bullitt Foundation
OMERS Administration Corporation
Ibgeana Society of Assistance and Security SIAS / Sociedade The Central Church Fund of Finland
Ibgeana de Assistência e Seguridade (SIAS) Ontario Teachers’ Pension Plan
The Co-operators Group Ltd
IDBI Bank Ltd OP Fund Management Company Ltd
The Daly Foundation
Ilmarinen Mutual Pension Insurance Company Opplysningsvesenets fond (The Norwegian Church Endowment)
The GPT Group
ING Oregon State Treasurer
The Joseph Rowntree Charitable Trust
Instituto de Seguridade Social dos Correios e Telégrafos- Postalis Orion Asset Management LLC
The Local Government Pensions Institution
Instituto Infraero de Seguridade Social – INFRAPREV Parnassus Investments
The Pension Plan For Employees of the Public Service Alliance
Instituto Sebrae De Seguridade Social – SEBRAEPREV Pax World Funds of Canada
Investec Asset Management Pensioenfonds Vervoer The Pinch Group
Irish Life Investment Managers Pension Protection Fund The Russell Family Foundation
JPMorgan Chase & Co. PETROS - The Fundação Petrobras de Seguridade Social The Shiga Bank, Ltd.
Jupiter Asset Management PFA Pension The Standard Bank Group
KB Kookmin Bank PGGM The United Church of Canada - General Council
KDB Asset Management Co., Ltd. Phillips, Hager & North Investment Management Ltd. The University of Edinburgh Endowment Fund
KEPLER-FONDS Kapitalanlagegesellschaft m. b. H. Pictet Asset Management SA The Wellcome Trust
KfW Bankengruppe PKA Westpac Banking Corporation
KlimaINVEST Pluris Sustainable Investments SA Threadneedle Asset Management
KPA Pension Pohjola Asset Management Ltd Tokio Marine & Nichido Fire Insurance Co., Ltd.
La Banque Postale Asset Management Portfolio 21 Investments Toronto Atmospheric Fund
La Financière Responsable PREVI Caixa de Previdência dos Funcionários do Banco do Brasil Trillium Asset Management Corporation
Lampe Asset Management GmbH Provinzial Rheinland Holding Triodos Investment Management
LBBW Asset Management Investmentgesellschaft mbH Prudential Financial US Union Asset Management Holding AG
Legal & General Investment Management Psagot Investment House Ltd UNISON staff pension scheme
LGT Capital Management Ltd. PSP Investments UniSuper
Light Green Advisors, LLC QBE Insurance Group Unitarian Universalist Association
Living Planet Fund Management Company S.A. Rabobank United Methodist Church General Board of Pension and Health
Benefits
Local Authority Pension Fund Forum Railpen Investments
Universities Superannuation Scheme (USS)
Local Government Super Rathbones / Rathbone Greenbank Investments
Vancity Group of Companies
Local Super Rei Super
Veris Wealth Partners
Lombard Odier Darier Hentsch & Cie Reliance Capital Ltd
VicSuper Pty Ltd
London Pensions Fund Authority RLAM
Victorian Funds Management Corporation
Lothian Pension Fund Robeco
Vision Super
Macif Gestion Rockefeller Financial
Waikato Community Trust Inc
Maple-Brown Abbott Limited Rose Foundation for Communities and the Environment
Walden Asset Management, a division of Boston Trust &
Maryland State Treasurer Royal Bank of Canada Investment Management Company
McLean Budden RREEF Investment GmbH WARBURG - HENDERSON Kapitalanlagegesellschaft für
Meeschaert Gestion Privée SAM Group Immobilien mbH
Merck Family Fund SAMPENSION KP LIVSFORSIKRING A/S WARBURG INVEST KAPITALANLAGEGESELLSCHAFT MBH
Meritas Mutual Funds SAMSUNG FIRE & MARINE INSURANCE West Yorkshire Pension Fund
MetallRente GmbH Sanlam WestLB Mellon Asset Management (WMAM)
Metrus – Instituto de Seguridade Social Santa Fé Portfolios Ltda Winslow Management, A Brown Advisory Investment Group
Midas International Asset Management SAS Trustee Corporation Woori Bank
Miller/Howard Investments Schroders YES BANK Limited
Missionary Oblates of Mary Immaculate Scottish Widows Investment Partnership York University Pension Fund
Mistra, Foundation for Strategic Environmental Research CRD Analytics Youville Provident Fund Inc.
Mitsubishi UFJ Financial Group (MUFG) SEB Zegora Investment Management
Mizuho Financial Group, Inc. SEB Asset Management AG Zevin Asset Management
Mn Services Seligson & Co Fund Management Plc Zurich Cantonal Bank
Monega Kapitalanlagegesellschaft mbH Sentinel Investments
Motor Trades Association of Australia Superannuation Fund Pty Seventh Swedish National Pension Fund (AP7)
Ltd
Shinhan BNP Paribas Investment Trust Management Co., Ltd
Mutual Insurance Company Pension-Fennia
Shinkin Asset Management Co., Ltd
Nathan Cummings Foundation, The
Siemens Kapitalanlagegesellschaft mbH
National Australia Bank
Signet Capital Management Ltd
National Pensions Reserve Fund of Ireland
Smith Pierce, LLC
National Union of Public and General Employees (NUPGE)
SNS Asset Management
Nedbank Limited
Social(k)
Needmor Fund
Solaris Investment Management Limited
Nelson Capital Management, LLC
Sompo Japan Insurance Inc.
Nest Sammelstiftung
Sopher Investment Management
Neuberger Berman
SPF Beheer bv
New Mexico State Treasurer
Sprucegrove Investment Management Ltd
New York State Common Retirement Fund (NYSCRF)
Standard Life Investments
Newton Investment Management Limited
State Street Corporation
NGS Super
StatewideSuper
1Corporations, investors and governments today are faced with a choice: to com
CDP Water Disclosure Project 2011 or to advance towards a low carbon economy that enables sustainable, profitab
Forewords increasingly scarce materials.
Last year, global energy-related carbon dioxide emissions reached a record high
estimates made for bleak reading but compounded the necessity to take bold an
chance of limiting temperature increase to the 2°C level agreed by world leaders
East Earthquake as we pray for change.
Carbon Disclosure Project corporate agenda
What’s more, as climate
rising energychange.
demands are competing for a limited supply of fossil f
ate change strategy and GHG scarce natural resources is putting pressure on commodity prices and having a g
In late 2011 floods disrupted millions The 2030 Water ItResources Group
he ninth year CDP has issued economically. is clear that today, more than ever, we must build momentum to dec
of lives in Thailand and Cambodia, predicts that the global demand for
inundating thousands of local water will outstrip supply by 40%
businesses and wiping more than 1.5% Managing carbon emissions and protecting the business from climate change im
by 2030 and that closing this gap
iation towards thoseGDP. Meanwhile much of
off Thailand’s sustainable and strong shareholder returns. Earlier this year, the investment consulta
could cost as much as $50 to $60
pe for their
Texascontinued support.
is suffering from a drought that that the
billion best
a year forway for years.
twenty institutional
As investors to manage portfolio risk associated with
has already lasted 15 months and by their portfolios into climate-sensitive
growing demand for water from assets with an emphasis on those that can ad
its expiry in 2012
August 2011and
haditcost
is not
over $5.2 billion industrialisation and population growth
greement around the
in agricultural Postaccording to
losses isAn important part
compounded of an change
by climate investor’s strategy should be to engage with the compa
Texas A&M
r fundamental University.
review as a Yet the impact performance improvement.
and growing uncertainty of supply, Carbon Action is a new initiative launched by CDP t
of these events goes beyond the of global
the investors to encourage
economy their portfolio companies to reduce emissions by inve
will be reoriented
local devastation. The Thailand floods with a satisfactory
towards businesses that payback period. Carbon Action reflects a growing recognitio
take active
have caused
ng. However, within disruption
GHG to the global stewardship of water resources
reduction activities and
that companies can undertake that have a very clear busine
working, there has been majorautomotive
supply of computer and build
of allresilience
investors,to shortages
and not just andthe more active owners of investments, to ensure th
components, while events in Texas floods. The companies that succeed
ement towards reducing the
have led to food and agriculture losses will
HG emissions generated from Asbe thethose that consider
management water with
of carbon continues to move into companies’ core business
and a reduction in export opportunities. the strategic importance it deserves
ness activities.
These eventsIn addition
are a powerful reminder thinking, demand for primary corporate climate change information grows aroun
and take steps to transform their
corporation
of the strategic2),
(Scope there
importance that water behalf of 551 institutional investors to gather relevant information from large cor
business now.
the Ministry of Environment
has for global business. working with global businesses and governments to strengthen the resilience a
porations will be requested to through
CDP Waterthe CDP Supply
Disclosure’s goalChain program. CDP Cities has launched to help the wo
is to aid
The advantage of understanding risktransformation
that and bolster economic growth, whilst CDP Water Disclosure is now in its sec
by encouraging
water’s importance is certainly tangible companies
meaningful andtosystematic
improve water management. A key part of CDP’s strategy is to en
reporting
e of theforimpact from clothing
the world’s the Greatcompanies. Towater
on assist with this
globally companies
so that investors are
andable to obtain tools that help them to measure
Many struggled
From 2011’s as floods
responses, we and droughts effectively,
other through
stakeholders canCDP Reporter Services.
understand
pandedinreporting
the world’sboundaries
major cotton growing how companies are building water
regions coupled
will serve you as a valuablewith a surge in into
It istheir core business
through strategies,
partnerships that CDP can achieve the largest impact. We are delig
demand from Asia drove prices on the and so that leading practices
PwC, our Global Advisor, as canwell
be as with Accenture, Microsoft, SAP and Bloomb
New York Cotton Exchange from 86 shared. The 354 institutional investors
around the world are integral to the acceleration of CDP’s mission.
to 230 cents per pound in the year to which requested information from
March 2011. By understanding water their portfolio companies through
Whilst we wait patiently for much needed global regulation, business must cont
risk in their supply chain, companies us this year are the vanguard of this
can prepare for it and manage it. That out opportunities by doing more with less. The decisions that perpetuate a legit
transformation and we are delighted to
is why H&M is participating in global economy will bring considerable value to those that have the foresight to make
be working with them.
initiatives to educate cotton farmers report and the companies’ responses assist in illuminating that path.
on better farming practices and why
PPR’s subsidiary Puma has set water
use reduction targets that go beyond
its operations to include its suppliers’
water use as well.
Paul Simpson
2011 saw a marked increase in Paul
CEOSimpson
the number of the world’s largest Carbon Disclosure Project
CEO, Carbon Disclosure Project
companies reporting on their water
usage, on the risks that water
presents, and on their responses
to that risk: of the companies in the
Global 500 that were sent the second
Carbon Disclosure Project (CDP)
Water Disclosure information request,
60% responded, up from 50% in
2010. However, responses from these
companies indicate that water is
impacting global business now, and
yet water is not nearly as high on the
2Forewords
National Business Initiative significant. Much of South Africa is likely in disclosing their water footprints and
to become drier and hotter over time. We investing in water solutions are to be
A notable finding in this report is that a have also nearly maximised the storage commended. At the same time we trust
significant number of large South African infrastructure on our river systems. that first movers will set the tone for
companies have either not been ready to Storing additional water is a major others to recognise the value of water as
disclose for lack of adequate or reliable challenge and is exacerbated by the fact part of sustainable development.
data or have perceived themselves to that we use more water than many of our
have low exposure to water related catchments are able to replenish. This
risk. This raises the question of whether has serious implications for many of our
companies are sufficiently aware of the most economically productive regions
multiple issues surrounding water with and could have a significant impact on
particular reference to water scarcity, our competitiveness. Consequently we Joanne Yawitch
projections of the impacts on water have resorted to balancing supply and
availability due to climate change, energy demand by transferring water across CEO, National Business Initiative
requirements and rapid urbanisation. catchments on a scale not seen in many
It also begs the question of whether places elsewhere in the world.
companies are able to assess the value
of water to their business. Would a This is not a theoretical problem. Many
business continue to operate if water companies who have participated in this
was suddenly not available to any part report disclose instances of operational
of the business including operations or supply disruptions resulting from
and supply chains? Is there potential physical water impacts that have
for conflict if intensive water users impacted the bottom line. Keeping in
compete with communities for water mind that the sample was selected
allocations? What are the economic and based on a theoretical exposure to risk
physical impacts to a business if any it is of concern that only half of those
part of the value chain is susceptible to invited to respond actually did so. What
severe weather events such as floods or is disclosed in this report is therefore
droughts? These are some of the issues the actions of South Africa’s leading
and questions that we hope will spark companies who on investigating the risk
debate and conversation concerning the found it to be of significant importance.
importance and value of managing water However, even within this leading
now and into the future. subset of responding companies only
two thirds consider water important
Water (its quantity, quality, access and enough to provide board oversight of the
usage) poses significant risks for society management of water.
at large and for the private sector as
a key user. Global concerns such as Water is a public good. It is not a
climate change and the international resource that is owned by any single
virtual trade of water required to support private user. Water catchments serve
a population that is simply too large for multiple users ranging from governments
our planet have significant local impacts. and communities to agriculture and
Within South Africa the threats to a heavy industry. How we as a nation
suitable supply of sufficient quality water negotiate, regulate and distribute water
put us in a uniquely vulnerable position. among equally deserving users is critical.
South Africa is a water stressed country, This is not a process that governments
increasingly dependent on water sources or corporations can do independently
outside our borders. We have a legacy of each other so multi-stakeholder
of mining and industry driven pollution collaboration is fundamental.
combined with an aging water treatment
and distribution infrastructure. And we It is therefore critical that more
live in a nation where an unacceptably companies take cognisance of the level
large amount of women and children still of risk posed by water and start to form
have to walk several kilometres each day partnerships with key stakeholders to
to access fresh water. In this context it work towards a comparable means
is our responsibility as corporate citizens of disclosing water use and develop
to work towards an equitable distribution collaborative solutions. It is hoped that
of clean water and to ensure the this first full CDP Water Disclosure Report
sustainability of the resource we do have. released in South Africa will be a catalyst
for the much needed, critical dialogue.
The challenge that climate change will
pose for our fresh water sources is Finally, those who have taken the lead
3CDP Water Disclosure Project 2011
Deloitte clear that understanding water and the
management of water is a journey. The
Starting of a new paradigm in journey is beginning for many with the
water management end game ensuring greater alignment of
water strategy with the overall business
Water is a strategic resource for strategy.
most global businesses.
We, at Deloitte, are proud to be part
The reasons are straightforward. In of CDP’s effort to increase awareness
Africa, a growing population and of the importance of addressing water
increasing economic activity coupled with scarcity and resulting business risks and
declining water quality in many regions opportunities. We recognize the efforts
has resulted in increased competition for of those companies that responded to
water in the public and private sectors. the information request, to the investor
Africa has a fundamentally low capability organizations which are signatories
to adjust to the effects of increased water to CDP Water Disclosure, and to our
stress. While the term “water scarcity” is colleagues from The National Business
frequently heard, we are more specifically Initiative who have shaped a successful
experiencing greater competition 2011 CDP Water Disclosure program.
for water. The amount of fresh and
accessible water is static; we do not
create new water or “use up” existing
supplies. Instead we are placing greater
demands on an irreplaceable natural
resource.
The response to this increased Duane Newman
competition is multifold. Most Lead Director, Sustainability and Climate
importantly, the true value of water is Change Services
slowly being recognized in Africa. From a
business perspective, the value of water
resides in business continuity (having an
appropriate quantity and quality of water),
license to operate, and brand value.
Water scarcity is fundamentally about
understanding water risk and resultant
business risk (operational, regulatory,
and reputational), but understanding
risk is only the beginning of a successful
water stewardship effort. Stewardship
requires engagement with stakeholders
to collaboratively manage water as a
shared resource; it is not possible to
address the challenges posed by water
scarcity alone. The need to engage
with other peers and other sectors,
non-governmental organizations
(NGOs), communities, and governments
to develop broad watershed-level
approaches to managing water is
essential. Water scarcity is also starting
to drive innovation.
This report reflects these changes in how
South African businesses are starting
to manage the risk and create business
opportunities. The CDP Water Disclosure
information request is an important effort
in transforming how we manage one of
our most essential natural resources. It is
4Contents
Executive Summary 6
1 Introduction 8
2 JSE 100 Overview 13
3 disclosure analysis 16
4 Sector Summaries 32
5 Additional Responses 39
6 Conclusions 41
Appendix I Report Methodology 44
List of Figures
Figure 1: Estimated World Water Use 1990 - 2000 8
Figure 2: The Supply and Demand Problem in South Africa 10
Figure 3: Water-use by Sector versus Contribution to GDP in South Africa 12
Figure 4: Responding Companies by Sector 13
Figure 5: Reported Risks by JSE 100 Respondents: Direct Operations and Supply Chain 18
Figure 6: Risk Certainty Comparison: JSE 100 versus G500 Sample 20
Figure 7: Exposure to Water Risks: JSE 100 versus G500 Sample 20
Figure 8: Timeframes for Water Risks: JSE 100 versus G500 Sample 20
Figure 9: Exposure to Water Opportunities 22
Figure 10: Timeframes for Water Opportunities 22
Figure 11: JSE 100 Respondents Reporting Targets by Type 24
Figure 12: Water-related Targets 25
Figure 13: Actions being taken by JSE 100 Respondents in Relation to Water Risks 26
Figure 14: Water Accounting Disclosure by Type (% of Total) 29
Figure 15: JSE 100, Australia 100 and Global 500 Water Management 31
Figure 16: Consumer Staples Summary of Water Disclosure Indicators 32
Figure 17: Health Care Summary of Water Disclosure Indicators 34
Figure 18: Materials Summary of Water Disclosure Indicators 36
List of Tables
Table 1: Companies Responding to the CDP Water Disclosure (2010 and 2011) and CDP Investor Response (2011) 14
Table 2: JSE 100 Disclosure Summary: Understanding Water Risks 17
Table 3: JSE 100 Performance Summary: Governance and Accountability 23
Table 4: JSE 100 Performance Summary: Strategy, Targets and Goals 25
Table 5: Companies Reporting on Water Abstractions, Re-use and Recycling 29
Table 6: Water Abstractions 29
Table 7: Water Re-use and Recycling 30
Table 8: JSE 100 Disclosure Summary: Water Accounting 30
Table 9: Consumer Staples Best Practice 33
Table 10: Materials Best Practice 38
Table 11: JSE 100 Voluntary Respondents 39
5CDP Water Disclosure Project 2011
Executive Summary
South Africa’s Water Challenge corporate context requires a broader respondents from the Global 500 sample
global perspective. The volume of and a further six voluntary responses.
Evidence is mounting that South Africa international virtual water-flows2 resulting The 2011 response therefore represents
is facing a water crisis of substantial from global trade in agricultural and a significant increase in the number of
proportions. This crisis encompasses all industrial products has averaged South African companies now being
aspects of water management on both 2.3 trillion cubic metres of water per included in this initiative.
the demand and supply side. It is being annum during the period 1996-2005.
driven by a burgeoning population, a Globalisation, and increased consumer This report, prepared by WSP
national drive to improve access to water demand has effectively resulted in Environment & Energy on behalf of the
and raise the overall standard of living for massive inter-catchment and inter-basin National Business Initiative (NBI), analyses
many of the country’s underprivileged, transfers of water occurring on a global the responses received from these South
an overburdened and ailing water scale. Corporations and consumers are African companies and marks the first
supply and sanitation infrastructure, the now able to impact on water resources comprehensive CDP Water Disclosure
mounting impacts of acid mine drainage, located halfway around the world and report specifically focusing on South
and declining water quality indicators are able to significantly influence, through African business. The key findings of the
nationally. South Africa’s water security their choices and actions, whether or report are summarised below.
is likely to be further complicated by an not these resources are sustainably
increasingly uneven and unpredictable managed. South Africa is no exception Disclosure Analysis and
supply of rainfall as a result of climate in this regard, with companies starting
change and by a reliance on significant
Findings
to consider not only the impacts of
water transfers from neighbouring their direct operations on local water While the small sample size of 26
countries. Even with out-of-country resources but also the impacts of their respondents makes it difficult to draw
transfers, South Africa is projected to supply chain on water resources across widespread conclusions, the following
experience a 17% gap between water the globe and the associated risks and findings are suggested from the CDP
demand and supply by 2030, equating opportunities these may present. Water Disclosure responses for South
to a water shortfall of 2.7 billion m3, with African firms:
some of our most economically important The CDP Water Disclosure
catchment areas among the worst Risks and Opportunities
affected. In meeting this crisis, South The CDP Water Disclosure, now in its
Africa will have to resolve tough trade- third year globally, provides international Many of South Africa’s most significant
offs in water use between agriculture, and South African companies with the corporate water users are not yet able
key industrial activities such as mining opportunity to publicly report on how or ready to report on their water related
and power generation, and the supply they are managing their water risks, risks. Although 2011 saw the number
to rapidly growing urban centres, while leveraging opportunities, and contributing of South African respondents increase
simultaneously maintaining the health of to the overall management of the planet’s significantly from 6 to 26 companies3 (out
critical natural freshwater ecosystems freshwater resource. of 56 invitees, or 46%), the response is
on which we depend for much of our still lower than the Global 500 sample
adaptive capacity to climate change. The 2011 CDP Water Disclosure is which had a response rate of 60%.
formally supported by 354 investors,
The role of business in mitigating and representing US$43 trillion in assets, The level of risk and opportunity
adapting to the country’s emerging water with 315 companies from the world’s reported by South African
crisis is still being debated, but it is clear 500 largest companies in the FTSE respondents is both widespread and
that JSE 100 companies will need to Global Equity Index Series (Global 500 substantial. The reported exposure
show leadership in sustainably managing sample) being invited to respond. Invited to water related risks by South African
the water resources on which they rely companies have been selected because respondents is significantly greater than
for their day-to-day business operations. they are considered either to be active in that reported by the Global 500 sample.
The available evidence is clear. It is not water-intensive sectors or to be active in The overwhelming majority of companies
sustainable to continue exploiting water sectors sensitive to water issues within (85%) identified at least one water risk
resources by following a ‘business as their supply chain. at the direct operational level, compared
usual’ approach. If this is the case, South to just 55% for the Global 500 sample.
Africa’s freshwater resources will be In addition to the Global 500 sample, a Only two respondents, both from the
depleted and unable to meet the needs sub-set of 56 companies from the 100 Industrials sector, do not believe they are
of people and industry by 2030, if not largest companies listed on the South at risk from any water related issues. A
before. African Johannesburg Stock Exchange further 77% of South African respondents
(JSE 100) were also invited to participate report that water management may also
present substantive opportunities to their
The Global Dimension this year. Of these 56 invitees, 26
business, with the vast majority of both
responses were received with a further
While water resource management is five companies responding on a voluntary risks and opportunities being expected
fundamentally a local issue affecting basis. In 2010, South African companies to manifest themselves in the near term
and requiring engagement with local were represented by a sample of six (within the next 5 years).
stakeholders and role-players, the
management of water in the modern 2 See Box 1.
3 Excluding the six voluntary responses received in 2010
and five voluntary responses in 2011.
6Executive Summary
The top three risks identified by overcome issues around water allocation The Way Forward for South
respondents for direct operations were: and influence future strategic direction
physical water scarcity (85%), higher of local catchment development. 15
African Business
water prices and declining water quality out of the 26 companies (58%) can With an impending South African
(42% each); while the top supply chain provide explicit examples of stakeholder water crisis being widely predicted, it is
risks were: physical water scarcity consultations. 35% of companies also unsurprising to see that the level of risk
(35%), declining water quality (15%) note the importance of involvement reported by South African business is
and inadequate infrastructure and in ‘public policy’ around water issues significantly higher than that reported
reputational damage (8% each). and the value of links to NGO’s, such by the Global 500 sample group of
as the WWF, governmental bodies, or companies. The risks and opportunities
Respondents are much less confident engagement with the National Business identified by South African respondents
in identifying and reporting on supply Initiative (NBI), South African Chamber have the potential to generate
chain water risks. 38% of companies of Commerce and Industry (SACCI), substantive changes to their business,
were unable to say whether they are Business Unity South Africa (BUSA) with the vast majority of these being
exposed to risk in their supply chain or and other business forums as important identified as short term (within the next 5
not, as opposed to 8% of companies contacts for engagement on water years). When seen against the backdrop
when assessing direct operational risks. issues. of a projected national water crisis, the
This level of uncertainty is not surprising case for urgent action is compelling.
when one considers that only five (19%) There is a need to improve target Due to the nature of water risks, the
respondents report the inclusion of water setting as well as verification of number of stakeholders involved, the
related issues in supplier questionnaires. water accounting data. 65% (17) technological and capital requirements
Notably, of these five respondents, four of respondents report some form of for solutions and the timeframes involved,
report that they are at risk to water issues water-related goal or target setting. The companies need to act now in support of
within the supply chain. majority of these targets are quantitative a consistent and stable supply of water.
efficiency (or intensity) targets. Only two
The disclosure results suggest that those respondents report on setting absolute It is in the long term interests of business
companies that have invested significant reduction targets and four report on that it plays a leading role in finding and
time and effort in understanding their setting explicit water quality discharge driving solutions to South Africa’s water
water management challenges are targets. The low level of explicit targets management challenges. Key to this
finding material water related risks (and reported for water quality overall is will be the extent to which business can
opportunities) for their business and that particularly concerning in light of the successfully and transparently engage
this is especially true for risks arising in acute water quality predicament facing in collaborative efforts and management
companies’ supply chains. South Africa. initiatives – with other businesses,
The overwhelming majority of companies government regulators and policy
Taking Action (92%) are able to provide figures for total makers, NGO’s, local communities and
water withdrawals, while disclosure of other stakeholders at the watershed
There is a mismatch between
water re-use and recycling is substantially management level. No single stakeholder
the magnitude of identified risk
better than the Global 500 response. can face this challenge alone.
and the governance of the risks.
Despite the level of substantive risks However, although almost 90% (23)
of the respondents report that their By asking the relevant questions,
and opportunities reported, only 65%
withdrawal data was verified, only three the CDP hopes to raise investor and
of South African respondents report
companies explicitly indicate that they are corporate consciousness as to what
having board oversight of the risks and
making use of third-party verification or business could be doing around water
opportunities. While this is comparable
assurance. The rest of the companies are governance and management, and
to the Global 500 response, it should be
assumed to be using internal verification ultimately to raise the benchmark.
seen in the context of the greater level
systems. The lack of independent Companies that have responded to
of risk reported by South African firms.
verification makes benchmarking and the 2011 CDP Water Disclosure have
Furthermore, only 69% in the South
tracking progress against targets difficult taken one of the key steps to improved
African sample report having a water
to assess with confidence. corporate water management: disclosure
management policy, strategy, or plan in
of performance and transparency to
place as compared to the Global 500
An accepted common approach investors and other stakeholders. While
(93%) and Australia 100 samples (86%).
to corporate water accounting recognising that further action is needed
principles is needed. Companies are by all role-players, these companies are
South African companies are
also grappling with the fact that there is to be commended for their contribution
recognising that water stewardship
not yet an accepted standard for water to delivering change and for helping to
requires multi-faceted action, which
accounting. The future development of secure and sustainably manage South
includes local stakeholders and
such a standard is pertinent to facilitate Africa’s precious water resource.
cooperative partnerships. South
African companies are mitigating risk effective benchmarking and accurate
through ‘stakeholder engagement’, measuring of performance against
‘collective actions’ and ‘watershed targets.
management’ initiatives in order to
71
CDP Water Disclosure Project 2011
Introduction
In 2010, the Carbon Disclosure Project To facilitate the transparent Setting the Context
(CDP) launched its water programme, reporting of companies’ water
the CDP Water Disclosure, to help related impacts and actions, The Globalisation of Water
investment and business communities and to encourage improved The world has witnessed a massive
better understand the risks and understanding, management increase in water demand over the
opportunities associated with water and actions related to risk and past century (see Figure 1), driven
scarcity and other water-related opportunity; by the forces of industrialisation,
issues. The initiative reflects a growing economic development and population
awareness within the corporate sector To provide investors and
growth. This increase in global water
as well as the broader investment stakeholders with the information
demand is leading to increased
community as to the critical importance to understand global best practice,
tensions and challenges around the
of water to business continuity. the current level of response of
effective management of finite local
business in general as well as
freshwater resources in many parts of
In 2011, the CDP Water Disclosure was sector specific responses;
the world, where industry, agriculture
formally supported by 354 investors, and local communities compete for
To provide contextual commentary
representing US$43 trillion in assets. this precious resource. While at the
on the material issues surrounding
315 companies from the world’s same time the ecosystems that rely
water on a global and local level;
500 largest companies in the FTSE on water, but also enhance water
and 4
Global Equity Index Series (Global 500 provision and purification and provide
sample), representing companies from To provide decision makers with adaptive capacity to climatic changes,
30 countries, were invited to respond. an outlook on corporate water are increasingly threatened.
Companies were selected because practices in relation to existing
they were considered to be in either policies. In the past, issues associated with
water-intensive sectors or sensitive to the effective management of local
water issues in their supply chain. The freshwater resources would have
response rate amongst the Global 500 remained just that – a local issue.
sample increased to 60% from 50% in
2010.
Figure 1: Estimated World Water Use 1990 - 20004
In addition to the Global 500 sample, a
sub-set of 56 companies from the 100 4000
largest companies listed on the South
African Johannesburg Stock Exchange
(JSE 100) were invited to participate
this year. This report, prepared by
WSP Environment & Energy on behalf 3000
of the National Business Initiative
(NBI), analyses the responses from
these South African companies and
marks the first comprehensive CDP
km3 per year
Water Disclosure report specifically 2000
focusing on South African business. In
2010, South African companies were
represented by a small sample of only
six respondents within the Global 500
and a further six voluntary responses.
1000
Of these 12, eight responded
publically. The 2011 response
represents a significant increase in the
number of South African companies
now being included in this initiative.
0
1900 1920 1940 1960 1980 2000
Through the water disclosure process
and subsequent analysis, the CDP Reservoir Losses Industrial Municipal Agricultural
hopes to fulfil the following aims and
objectives:
4 Food and Agriculture Organisation (FAO) Indicators for
Sustainable Water Resource Development.
8Introduction
Two key phenomena have emerged
over the past few decades to change Box 1: The Concept of Virtual Water
this view. The first is climate change,
Global markets are heavily will need to produce 50% more
which is projected to lead to decreased
dependent on the transfer food and energy and will use 30%
availability of freshwater resources in
(import and export) of hidden more fresh water.
many of the world’s less developed
“virtual” water associated with
regions, including southern Africa, The two major drivers of change
the production of goods, often
along with the potential for increased in terms of avoiding such adverse
originating from places which are
extreme weather events such as impacts are both the producers
already highly exposed to water
flooding and droughts5. of goods and services (business),
scarcity6. In the UK, for example, it
has been estimated that two-thirds and the consumers of these
The second phenomenon is that of goods. For many businesses, their
globalisation and increased population of all the water that its population
of 60 million people consume supply-chain water footprint is
growth. In the modern era, the wheat much larger than their operational
we consume, the beverages we actually comes embedded within
the imported food they eat, the footprint. Achieving improvements
drink, the clothes we wear and the in the supply chain may be more
oil we burn may have been grown, clothes they wear and industrial
or chemical goods they purchase. difficult – but can often prove to
manufactured or processed halfway be more effective. Businesses can
around the world, using “local” water The result is that local water
management issues affecting reduce their supply chain water
resources. This has given rise to footprint and their risk exposure
the concept of “virtual water flows” disadvantaged communities around
the world may be significantly by making supplier agreements
between countries (see Box 1). The or by simply changing suppliers.
global volume of international virtual exacerbated and influenced by
consumption patterns in more Among the various alternative
water-flows resulting from global trade or supplementary tools that can
in agricultural and industrial products affluent countries.
help improve transparency are:
has averaged 2.3 trillion cubic metres The impacts of global consumption product labelling, certification and
of water per annum during the period habits on international water water footprint reporting. This
1996-2005. The international nature security are likely to increase in transparency can ultimately help
of the modern corporate supply chain future with population growth, the consumer to make informed
now lends a distinctly global dimension urbanisation, climate change, and choices on the water sustainability
to the sustainable management of local a switch to meat-based diets in of the product they are buying,
freshwater resources. Globalisation countries such as China. According driving demand and new markets
and increased consumer demand has to some reports, by 2030 the world for sustainable goods and services.
effectively resulted in inter-catchment
and inter-basin transfers of water
occurring on a global scale.
The local dimension is also driven one physical location to another.
by the fact that the local context is The challenge facing South African
Retaining the Local Dimension
critical to determining the relative business is to identify these local
Despite the internationalisation of value and importance of water within issues across a company’s global
water management and security, the corporate water footprint. For operations and supply chain, and
water remains a fundamentally local example, a litre of potable water in then translate these into an effective
issue requiring local management. “water-rich” Scandinavia is unlikely management strategy at the corporate
The impacts of inadequate water to be as precious as a litre of potable level.
management are borne not only water in water-scarce Namibia or
by business but also by the local the arid Northern Cape Province of
communities and local ecosystems South Africa, regardless of the actual
sharing the water resource. In Rand value associated with each. 6
this context, large corporations Similarly a litre of water drawn from
are required to interact with local a potable aquifer is of greater value
water management officials, local than a litre of water drawn from a
communities and other local role- highly saline or polluted groundwater
players to a far greater extent than resource, all other things being equal.
is the case for managing carbon Consequently, corporate water
emissions. management issues will differ from
5 IPCC Fourth Assessment Report (2007) Climate Change
2007: Working Group II: Impacts, Adaptation and 6 Royal Academy of Engineering (2010) Global Water
Vulnerability. Security – an Engineering Perspective.
9CDP Water Disclosure Project 2011
“When all the facts are Figure 2: The Supply and Demand Problem in South Africa8
considered in detail, and Gap between Existing Supply and Projected Demand in 2030
not just the sanitised Percent of 2030 demand
overview values presented Luvulvhu-
Letaba
in summary reports, it is Crocodile West Limpopo
and Marico
difficult to argue that South Olifants
Inkomati
Africa is not already in the
grip of a water crisis.” Upper
Lower Vaal
Vaal
Independent Scientists, Middle
Vaal
Africa Earth Observation Thukela UsutuMhlatuze
Network7 Lower Upper
Orange Orange Mvoti to
Umzimkulu
Olifants/
Doorn
Fish- Mzimvubu-
Tsitsikamma Keiskamma
Gouritz
Berg
Breede
Size of gap
Surplus Moderate (0% to 20%) Severe (20% to 80%)
We are Heading for Trouble be prohibitively expensive desalination
plants. The supply-demand deficits
According to research South Africa
projected by the Water Resources
is expected to experience a 17%
Group, and those similarly reported in
gap between water supply and water
the National Water Resources Strategy11
demand by 2030, equating to 2.7
(NWRS), implies the necessity to further
billion m3 of water9. The projections
expand the national water supply
indicate that some of our most
infrastructure, even though South Africa
economically important catchment
already experiences one of the highest
areas will be worst affected. In 2030,
water resource withdrawal rates in the
the Upper Vaal and Olifants, close
world and is already defined as water
to Johannesburg, will face supply
stressed12. The total available freshwater
shortfalls of 31% and 39% respectively.
resource to South Africa has been
The Berg water management area,
estimated at 50 trillion litres. According
which includes Cape Town, will face a
to the FAO of the United Nations,
supply shortfall of 28%10 (see Figure 2).
approximately 25% of this total resource
is withdrawn annually compared to a
In line with these projections, some
global average of just 9%13.
South African municipalities are already
proceeding with the installation of
what were previously considered to
11 Department of Water Affairs & Forestry (2004) National
Water Resource Strategy, First Edition.
12 The WRI proposes that water stress is experienced
by countries suffering from periodic water shortages,
8 2030 Water Resources Group (2009) Charting our Water where water supplies are below 1,700m3 per capita. FAO
7 De Villiers, S and de Wit, M (2010) H2O-CO2-Energy Future.
Equations for South Africa. Present Status, Future AQUASTAT (2002) reports that South Africa has total
Scenarios and Proposed Solutions. AEON Report Series 9 Ibid. renewable water resources of 1,153m3 per capita.
No 2. 10 Ibid. 13 FAO AQUASTAT (2002) Country Fact Sheet, South Africa.
10Introduction
Of significant concern is that the
NWRS deficit scenarios do not take Box 2: Acid Mine Drainage – The Mining Legacy
into account the probable impacts of
climate change which is projected to The South African mining sector Whilst manageable in small
reduce freshwater availability in many is one of the critical pillars and volumes, the potential volume
parts of the country, in particular the drivers of the South African resulting from over 100 years of
north, west and southwest of South economy. However, mining gold mining in South Africa is
Africa, and which is also considered activities, principally gold mining alarming. The volume of water
likely to increase the intensity and but also coal, are also associated emanating from the West Rand
frequency of extreme weather events with environmental contamination gold field near Krugersdorp is
such as droughts14. – the principle example is acid sufficient to fill at least 10 Olympic
mine drainage (AMD). AMD occurs size swimming pools (25,000m3)
The deficit scenarios also do not when highly acidic liquid from mine every day17. The total daily decant
account for the severe water quality shafts, mine waste dumps, tailings across South Africa is estimated
issues which are manifesting and ore stockpiles overflows to be at least 10 times this volume.
themselves around the country, (decants) or infiltrates the natural Much research is still required to
impacting upon both groundwater and environment. AMD usually contains develop appropriate treatment
surface water resources. The situation high concentrations of heavy methods to enable cost-effective
is considered so serious that some metals, sulphides, and salts which treatment of the quantity of AMD
scientists are stating that South Africa’s are a potentially hazardous threat waters present in South Africa. The
“water quality crisis” poses a greater to natural aquatic systems and priority focus of AMD was noted in
risk to South Africa’s long term supply potable surface and groundwater the 2012 Budget speech, in which
of freshwater than climate change15. quality. The problem is particularly Finance Minister Pravin Gordhan
South Africa’s water quality issues apparent in the traditional gold tabled the allocation of R225 million
are primarily a legacy of past, and in mining areas of the Witwatersrand, over the next two years to design
some cases present, mining practices and the threat may become worse and build an acid mine water
(Box 2) but are also associated with if remedial actions are delayed treatment facility in the Vaal water
inadequately maintained and failing further or not implemented at all. management area.
water sanitation infrastructure around
the country.
the hundreds of billions of Rands by if its water use is less significant at the
These issues are resulting in the 2025 will be required to address these regional or national level.
widespread decline in quality of South issues. A change in mind-set over how
Africa’s freshwater resources, as we value and manage water is also Regardless of any one sector's
contaminated water enters our aquifers undoubtedly a necessary part of the consumption, the impact of water
and inadequately treated effluent is solution. shortages on business is something
discharged into our natural waterways. that few, if any, companies can afford
This further weakens our storage South African Business and Water to ignore, considering the strategic
capacity as operators need to release risks (and opportunities) posed by a
more water to dilute downstream As shown in Figure 3, the agricultural
water-constrained future, not least of
pollution. and forestry sector are estimated
which is a fundamental reliance on
to account for 65% of the country’s
a secure water supply for everyday
Compounding the above issues is water consumption, compared to 4%
operations.
the fact that many local government for the industrial sector and 2% each
authorities are also struggling to for the mining and energy production
Sharing the Load – A Multi-
maintain the existing water supply sectors. In spite of the relatively small
Stakeholder Challenge
infrastructure, resulting in substantial consumption figures attributed to the
losses of water via leakages and industrial, mining and energy sectors, The sustainable management of
reduced overall security of supply16. the impacts of these sectors on water water is a shared responsibility; no
Substantial investments, running into management are far more significant single stakeholder can ensure a
when one includes impacts on water sustainable outcome alone. While
14 IPCC Fourth Assessment Report (2007) Climate Change
quality and contributions to climate physical water risks, such as water
2007: Working Group II: Impacts, Adaptation and change via carbon emissions. In scarcity or quality, are often the most
Vulnerability.
15 De Villiers, S and de Wit, M (2010) H2O-CO2-Energy
addition, a major industrial facility may obvious challenges, how the water
Equations for South Africa. Present Status, Future very well be the single biggest, and resources are allocated, regulated, and
Scenarios and Proposed Solutions. AEON Report Series
No 2. certainly the most visible, water user
16 CSIR (2007) The State of Municipal Infrastructure in South within a local catchment context, even 17 Hobbs, P. (2011) Enviropaedia, Acid Mine Drainage pp 13.
Africa.
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